High-risk systems waste billions

By Brad Bass

Mar 09, 1997

At two congressional hearings last week auditors from the General Accounting Office said information technology weaknesses have cost the government billions of dollars in fraud overpayments of benefits and purchases of unnecessary goods.

The fraud and waste as well as poor service to citizens occurred in systems that GAO classified as "high risk."

"In one fashion or another the solution to all of those high-risk areas revolves around using information technology more efficiently " Gene Dodaro assistant comptroller general at GAO's accounting and information management division told the Senate Governmental Affairs Committee last week.

Dodaro made similar statements the previous day to the House Ways and Means Subcommittee on Oversight.

Although both hearings included some discussion of the highly publicized mismanagement of the Internal Revenue Service's Tax Systems Modernization program Congress focused on IT issues at other agencies. "Unfortunately the problems that IRS has experienced are not confined to that agency " Dodaro said at the House hearing. "The failure to harness technology is at the heart of many of these high-risk programs."

The high-risk Medicare Transaction System (MTS) a Health Care Financing Administration system that will consolidate nine separate claims processing systems has been partially responsible for the government's failure to detect hundreds of millions of dollars in fraudulent Medicare claims said Leslie Arnowitz associate director of health financing and systems issues at GAO.

Arnowitz said HCFA still had not completely defined its requirements for the system two years after awarding a contract it employed a "risky" development schedule and began the project without adequate information on MTS' cost and benefits. She added that HCFA will need to undergo complex contractor transitions and software conversions before the systems can be fully installed creating potential future delays and disruptions. And because delays are expected to cause full installation of MTS to drag past the year 2000 HCFA must design plans to ensure its legacy systems are Year 2000-compliant.

Jane Ross director of income security issues at GAO's Health Education and Human Services division said the Social Security Administration relies on outmoded and inefficient computer matching technology to verify the eligibility of citizens who receive benefits through the Supplemental Security Income program. Technical shortcomings contributed to overpayments of $2.3 billion last year to people ineligible for the program which provides income to the elderly and people who are disabled.

SSA relies on matching data on earnings and unemployment maintained by states as well information collected by the IRS and the Department of Veterans Affairs. But Ross said computer matches on earned income rely on data six to 21 months old "allowing overpayments to accrue for this entire period before collection actions can begin."

She said SSA is testing on-line access to state databases an endeavor that GAO estimated could save $120 million a year. But Ross added "SSA has moved too slowly in this area."

Similarly antiquated equipment has made it difficult for the IRS to collect billions in delinquent taxes each year said Lynda Willis GAO's director of tax policy and administration issues. She said it can take the agency years to identify delinquent accounts because of its outdated computer equipment.

Willis also called on the agency to increase the percentage of taxpayers who file electronically as a way to more easily identify fraudulent returns.

GAO officials expressed fear that IRS systems - and therefore taxpayers' records - were vulnerable to unauthorized access. Rona Stillman chief scientist at GAO's Office of Computers and Telecommunications said the agency has not taken a proactive approach to information security and lacks even a statement of its security requirements. "They cannot tell you from top to bottom what kind of security [safeguards] they need " Stillman said.

At the Senate hearing Dodaro and John Koskinen deputy director for management at the Office of Management and Budget described financial management weaknesses at the Defense Department. Koskinen said DOD has installed "literally hundreds" of incompatible financial management systems in different parts of the organization.

As a result DOD cannot keep track of inventory and buys supplies that are not needed Dodaro said. He blamed the problem on DOD's lack of a "technical blueprint" for installing financial management systems and its "ad hoc and chaotic" software development efforts.

Dodaro and Koskinen agreed that these problems could largely be addressed if agencies adhered to language in recent legislation such as the Clinger-Cohen Act and the Government Performance and Results Act. These laws direct agencies to improve IT acquisitions through methods such as modular procurements and documenting returns on IT investments.

A source on the Governmental Affairs staff said committee members and staff planned to review agencies' strategic plans and financial statements as well as meet with agency representatives to track their progress in these high-risk areas.

The GAO director of information technology issues is leaving government after 16 years. On his way out the door, Dave Powner details how far govtech has come in the past two decades and flags the most critical issues he sees facing federal IT leaders.